Friday, September 5, 2014

Tax free bike parts

I was pretty stoked to find an email from my employer in my inbox after the holiday weekend highlighting some new benefits effective September 1st, namely the availability of new commuter spending accounts for biking and public transportation.  Employer transportation benefits have been around since 2009 when they were added to IRS Publication 15-B to help promote more environmentally friendly ways of getting to work and allow companies to set up flexible spending accounts for select commuting expenses.  These accounts work similar to how an HSA does for healthcare expenses and the transportation benefits fall into 2 categories, public transit and bike commuting.

Public Transit
For those who commute via bus or train, you're allowed to contribute up to $130/month via payroll deduction to a transit account (debit card) that can be used towards fares.  Like an HSA, these are pre-tax funds that you can bank up over time and use as necessary for eligible public transit expenses.

Bike commuting
Being a recent convert to pedaling my way to work, I was excited to find out I too could sock away tax free cash for commuting expenses.  I've logged close to 2000miles thus far this year and will likely need to replace wear items on my trusty steed in the near future and not having to pay taxes on these parts elevates bike commuting to hat trick status when combined with calorie shredding and gas savings.  The max contribution to the bike account is only $20/month but assuming I don't have regular run-ins with tire shredding debris or increase my bi-monthly cadence of wipeouts, a couple months of accrual should put me in good shape for the occasional maintenance item.

Also to note, this is an either/or type of deal so those who commute via a combo of bike and train/bus will have to pick their poison but transit is the more obvious choice as you can sock away quite a few more tax free Benjamins going that route.

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